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Changing Asia's Solar Game

November 4, 2015

Singapore is not often thought of as a competitive market for solar panels. Its thicket of high-rise office and apartment buildings means only a small patch of solar photovoltaic (PV) panels can be set atop each one to generate electricity—that may be a financially inefficient proposition for an individual building owner.

But its comprehensive government policy around solar could change all that. Earlier this year (June 2015), the Singapore government called its largest-ever solar-PV leasing tender to date. It intends to put panels on some 900 public housing blocks, as well as public-sector premises like water treatment plants and other government buildings. In the leasing model, the panels are leased from a private firm, paying nothing and buying electricity at an agreed-on rate.

The 40 megawatt-peak (MWp) of planned capacity from that tender is as large as all the capacity installed on Singapore's public housing blocks so far. The tender is part of Singapore's SolarNova programme to boost demand for solar energy, have solar contribute 350 MWp to electricity generation by 2020 (about 5 percent of peak electricity demand), and build industry capability.

The island-state is not the only Southeast Asian nation with a bold renewable energy target. Other countries are also aiming high. For instance, Thailand aims to get 25 percent of its energy consumption from renewables by 2022, while the Philippines wants half its electricity from renewables by 2030. And there is room to grow, said policy researchers from Nanyang Technological University's S. Rajaratnam School of International Studies in a November 2014 report: The huge solar potential in the region remains underdeveloped.”

Meanwhile, the overall Asian market for solar is burgeoning: Industry research firm Solarbuzz said in reports last year' that China, India, Japan, Australia and Thailand would make up some 60 percent of global solar PV demand in the second half of 2014. In June, India ramped up its solar target from 20 gigawatts (GW) to a whopping 100 GW by 2022.

WHY SOLAR?
There are many good reasons for governments to go after FAQssuch targets. Some developing countries like China hope to slash their air pollution from fossil fuels, while others like Thailand and the Philippines view solar energy as a way to help meet burgeoning electricity demand. In some cases, solar PVs make up part of a renewable energy portfolio that often includes wind and hydro power. Some countries, like India and China, are looking to give manufacturing a boost and support domestic production. Meanwhile, Singapore, Thailand and Malaysia are looking to diversify their energy sources away from natural gas and oil, for greater energy security.

What's more, many Southeast Asian countries at tropical latitudes enjoy fairly constant sunshine and have regions suitable for harvesting solar energy, like the provinces of Suphanburi and Kanchanaburi in central Thailand. Even in dense urban Singapore, solar energy could provide nearly a third of electricity demand if complemented by aggressive steps to increase energy efficiency, reckoned researchers from the Solar Energy Research Institute of Singapore in a report last year (2014).

SHIFTING SOLAR ECONOMICS
So what are governments around the region doing to meet their solar goals?

For the last five years or so, several countries in Southeast Asia have had feed-in tariffs that pay those who install solar panels for the electricity they generate.

The first to benefit were large ground-mounted solar farms that enjoy economies of scale; these are now springing up across the region. By the end of this year (2015), Thailand will have an installed capacity of 2,500 to 2,800 MW, the bulk of it from industrial-scale ground-mounted solar farms.

Today, Thailand is fine-tuning its feed-in tariff rates and structures to encourage smaller rooftop projects as well as community ground-mounted solar farms. Last year, too, it changed its planning regulations so that rooftop solar PV no longer required factory permits. Some notable urban projects to benefit include 1 MW of panels installed atop the Megabangna mega-mall in the heart of Bangkok, which generates 1,432 MWh of electricity a year—enough to power about 200 Thai homes.

Geography matters as well. Especially in remote areas or island locations, solar can be competitive with electricity from diesel generators or other sources. Last year, the first utility-scale solar farm in the Phillippines came online. The 13 MW portion of a planned 22-MW facility in the coastal San Carlos City on Negros Island helps meet demand in the fast –growing, energy-hungry Visayas region.

Meanwhile, countries that are removing their fossil fuel subsidies are indirectly making solar more attractive as a result. Last December, for example, Malaysia removed its subsidies on all fuel. Since then, firms like solar-leasing company Sunseap have reported greater interest in solar PV there as users expect the prevailing electricity tariff to rise.

Frank Phuan, director and co-founder of Singapore-based Sunseap, said, If I offer a price with no discount on the prevailing tariff, people will take it because they know they can benefit.”

Those dwindling fuel subsidies, combined with a feed-in tariff introduced in 2011 when Malaysia started its Sustainable Energy Development Agency (SEDA), mean the market is becoming attractive for solar users, In 2013, for example, manufacturing giant Yingli Solar supplied 10.269 MW of PV modules for an Amcorp Power solar farm, the largest single-site solar plant in Malaysia.

Though Malaysia is slowly reducing its feed-in tariff licence approvals, there are still opportunities for growth, said Yingli spokesman David Cheah. “Take Sabah and Sarawak for example, where we see active growth in demand for renewable energy,” he pointed out. The firm supplied equipment for a 1-MW solar plant in Sabah, E& Malaysia, which was commissioned in February (2015) and is one of the first solar farms there.

Where electricity prices are relatively high, like in the Metro Manila area where tariffs were as high as Phpl 1 per kWh last year (about US$0.24), solar can be a cost-effective alternative. Last year, 1,5 MW of solar panels were installed on the SM City North EDSA mall in the Philippines' Quezon City, supplying about 5 percent of its electricity and saving it about Php2 million a month.

ENERGISING DEMAND
Last year, Singapore took the unusual step of having public organisations lead and aggregate demand for solar energy. Its SolarNova programme is meant to help grow the scale • and capabilities of the local solar industry and help boost private-sector adoption of solar PV, such as at Jurong Port, where a 10-MW system covering over 95,000 square metres of rooftop will be the largest in the world for a port.

“The escalating adoption of commercially viable solar energy in Singapore will also generate new innovation opportunities around smart grids and energy management,” said Goh Ghee Kiong, executive director for Cleantech at Singapore's Economic Development Board.

THE OVERALL ASIAN MARKET FOR SOLAR IS BURGEONING…CHINA, INDIA, JAPAN, AUSTRALIA AND THAILAND WOULD MAKE UP SOME 60 PERCENT OF SOLAR PV DEMAND…

Other ways to boost demand include the adoption of Green building standards such as Singapore's Green Mark, Thailand's TREES, or Malaysia's Green Building Index. For example, Singapore has adopted a two-pronged strategy of dangling extra floor-area incentives for buildings that meet the highest of its Green Mark standards, and lauding outstanding players via schemes like the annual Solar Pioneer Awards, which will likely be given out for the seventh time this year.

INNOVATION IN TECHNOLOGY AND DESIGN
Finally, governments have taken steps to invest in innovations in solar PV technology and design.

Malaysia's Building Integrated Photovoltaic Project (MBIPV), was a scheme to promote more widespread use of building-integrated solar PV modules, which replaced conventional building materials. The programme, which ran from 2006 to 2010 before SEDA was implemented, was a joint effort between the Malaysian government, the United Nations Development Programme and the Global Environment Facility.

Today, it has borne fruit, as users realise the value of having building materials double up for energy generation and saving space. A 1-MW project by Sunseap in Malacca, for example, features a BIPV system raised 14 metres off the ground that provides shelter for a fish farm and plant nursery.

Since 2007, Singapore has funded research into solar PV and related technologies, such as smart grids and energy management, under its Clean Energy Research Programme. And public procurement programmes can serve as test beds for new technologies—the HDB is testing a number of copper indium gallium selenide (CIGS) PV panels on some blocks, which are more efficient at capturing the energy from diffuse sunlight than conventional panels.

WHAT STANDS IN THE WAY?
However, political stability and financing troubles can get in the way.

From 2013 to last year, Thailand saw a 60-percent drop in solar project financing due to political uncertainty after Prime Minister Yingluck Shinawatra was overthrown in a military takeover, according to a report from clean energy asset manager Armstrong Asset Management. Thailand, however, is still the largest solar energy market in the region.

And the inability to get financing can hobble smaller firms and projects, if banks view renewable energy as risky. But innovative financing models—such as solar leasing, solar power purchase agreements, and even crowdfunding—could be helpful, suggested researchers from Thailand's Chulalongkorn University and Japan's Nagoya University in a 2013 report for the Thai Solar PV Roadmap, a research and policy initiative.

In addition, government policies that underwrite risks can help potential solar adopters get financing and help encourage domestic firms enter new markets. Japan's government, for instance, has offered foreign aid for developing world solar projects, while IE Singapore helps domestic firms hoping to venture overseas.

So if they can overcome these challenges, Southeast Asian countries could be among the world's fastest-growing markets for solar energy.

Sunseap's Frank Phuan said, “In the next five to 10 years, solar will be one of the major contributors to expansion of renewable energy in the energy mix. It's scalable, fast to deploy, mature and bankable.